Measuring Untapped Revenue Potential in Developing Countries : Cross-Country Frontier and Panel Data Analysis

Efforts aimed at supporting domestic revenue mobilization in developing countries are often designed and evaluated based on empirical indicators, such as revenue-to-GDP ratios, which capture differences in achieved outcomes across countries. This paper studies a complementary approach to estimate do...

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Main Authors:	Bogetic, Zeljko, Naeher, Dominik, Narayanan, Raghavan
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2021
Subjects:	DOMESTIC REVENUE MOBILIZATION TAX POTENTIAL DATA ENVELOPMENT ANALYSIS TAX REVENUE TAXATION
Online Access:	http://documents.worldbank.org/curated/undefined/947561631709784641/Measuring-Untapped-Revenue-Potential-in-Developing-Countries-Cross-Country-Frontier-and-Panel-Data-Analysis http://hdl.handle.net/10986/36284

id	okr-10986-36284
recordtype	oai_dc
spelling	okr-10986-362842021-11-19T05:10:40Z Measuring Untapped Revenue Potential in Developing Countries : Cross-Country Frontier and Panel Data Analysis Bogetic, Zeljko Naeher, Dominik Narayanan, Raghavan DOMESTIC REVENUE MOBILIZATION TAX POTENTIAL DATA ENVELOPMENT ANALYSIS TAX REVENUE TAXATION Efforts aimed at supporting domestic revenue mobilization in developing countries are often designed and evaluated based on empirical indicators, such as revenue-to-GDP ratios, which capture differences in achieved outcomes across countries. This paper studies a complementary approach to estimate domestic revenue potential that also takes into account differences in countries’ fundamental economic structures and constraints associated with different capacities to raise domestic revenues, which are not captured by simple revenue-to-GDP ratios. Specifically, nonparametric data envelopment analysis is applied to estimate domestic revenue potential in a panel of 118 low- and middle-income countries from 2008 to 2019. The analysis addresses the following research questions: (i) How efficient are low-income countries compared with richer countries in mobilizing domestic revenues given the national economic conditions and resources available to each country (ii) What factors account for the variation in relative domestic revenue mobilization efficiency, that is, the fact that some countries generate more revenues than other countries with comparable economic structures The paper discusses the policy implications of the findings and demonstrates how the proposed method can be used to identify countries that are already performing close to their limit and those that still feature large untapped potential for further increasing revenues (and thus likely higher marginal benefits to external support for domestic revenue mobilization). Finally, the paper provides insights on the extent to which existing international support for domestic revenue mobilization is targeted at countries with larger untapped revenue potential. 2021-09-17T18:05:58Z 2021-09-17T18:05:58Z 2021-09 Working Paper http://documents.worldbank.org/curated/undefined/947561631709784641/Measuring-Untapped-Revenue-Potential-in-Developing-Countries-Cross-Country-Frontier-and-Panel-Data-Analysis http://hdl.handle.net/10986/36284 English Policy Research Working Paper;No. 9776 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	DOMESTIC REVENUE MOBILIZATION TAX POTENTIAL DATA ENVELOPMENT ANALYSIS TAX REVENUE TAXATION
spellingShingle	DOMESTIC REVENUE MOBILIZATION TAX POTENTIAL DATA ENVELOPMENT ANALYSIS TAX REVENUE TAXATION Bogetic, Zeljko Naeher, Dominik Narayanan, Raghavan Measuring Untapped Revenue Potential in Developing Countries : Cross-Country Frontier and Panel Data Analysis
relation	Policy Research Working Paper;No. 9776
description	Efforts aimed at supporting domestic revenue mobilization in developing countries are often designed and evaluated based on empirical indicators, such as revenue-to-GDP ratios, which capture differences in achieved outcomes across countries. This paper studies a complementary approach to estimate domestic revenue potential that also takes into account differences in countries’ fundamental economic structures and constraints associated with different capacities to raise domestic revenues, which are not captured by simple revenue-to-GDP ratios. Specifically, nonparametric data envelopment analysis is applied to estimate domestic revenue potential in a panel of 118 low- and middle-income countries from 2008 to 2019. The analysis addresses the following research questions: (i) How efficient are low-income countries compared with richer countries in mobilizing domestic revenues given the national economic conditions and resources available to each country (ii) What factors account for the variation in relative domestic revenue mobilization efficiency, that is, the fact that some countries generate more revenues than other countries with comparable economic structures The paper discusses the policy implications of the findings and demonstrates how the proposed method can be used to identify countries that are already performing close to their limit and those that still feature large untapped potential for further increasing revenues (and thus likely higher marginal benefits to external support for domestic revenue mobilization). Finally, the paper provides insights on the extent to which existing international support for domestic revenue mobilization is targeted at countries with larger untapped revenue potential.
format	Working Paper
author	Bogetic, Zeljko Naeher, Dominik Narayanan, Raghavan
author_facet	Bogetic, Zeljko Naeher, Dominik Narayanan, Raghavan
author_sort	Bogetic, Zeljko
title	Measuring Untapped Revenue Potential in Developing Countries : Cross-Country Frontier and Panel Data Analysis
title_short	Measuring Untapped Revenue Potential in Developing Countries : Cross-Country Frontier and Panel Data Analysis
title_full	Measuring Untapped Revenue Potential in Developing Countries : Cross-Country Frontier and Panel Data Analysis
title_fullStr	Measuring Untapped Revenue Potential in Developing Countries : Cross-Country Frontier and Panel Data Analysis
title_full_unstemmed	Measuring Untapped Revenue Potential in Developing Countries : Cross-Country Frontier and Panel Data Analysis
title_sort	measuring untapped revenue potential in developing countries : cross-country frontier and panel data analysis
publisher	World Bank, Washington, DC
publishDate	2021
url	http://documents.worldbank.org/curated/undefined/947561631709784641/Measuring-Untapped-Revenue-Potential-in-Developing-Countries-Cross-Country-Frontier-and-Panel-Data-Analysis http://hdl.handle.net/10986/36284
_version_	1764484933222400000

Measuring Untapped Revenue Potential in Developing Countries : Cross-Country Frontier and Panel Data Analysis

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